During 2020, Univ Company signed a non-cancellable contract with Univy to purchase 1,000 tons of cotton at P1, 200 with delivery to be made in 2021. On December 31, 2020, the price of cotton had fallen for P1,150 per ton. The company expects delivery of cotton when the price is P1,180 per ton on April 2021. What amount of gain from recovery of loss on purchase commitment, if any, should be recognized by Univ in 2021?

During 2020, Univ Company signed a non-cancellable contract with Univy to purchase 1,000 tons of cotton at P1, 200 with delivery to be made in 2021. On December 31, 2020, the price of cotton had fallen for P1,150 per ton. The company expects delivery of cotton when the price is P1,180 per ton on April 2021. What amount of gain from recovery of loss on purchase commitment, if any, should be recognized by Univ in 2021?

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Question

During 2020, Univ Company signed a non-cancellable contract with Univy to purchase 1,000 tons of cotton at P1, 200 with
delivery to be made in 2021. On December 31, 2020, the price of cotton had fallen for P1,150 per ton. The company
expects delivery of cotton when the price is P1,180 per ton on April 2021. What amount of gain from recovery of loss on
purchase commitment, if any, should be recognized by Univ in 2021?

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